Systems and Methods for Providing a Cash Value Adjustment to a Life Insurance Policy

ABSTRACT

A method and system for performing a cash value adjustment to an insurance policy issued by an insurer and owned by a policy owner, the method performed by a computer processing system. The method may include (1) inputting parameters of an insurance policy, the parameters including controlling parameters, and the controlling parameters including: (i) a constraint dictated parameter of the insurance policy; and (ii) a driven parameter of the insurance policy. The method may further include analyzing the relationship between the constraint dictated parameter and the driven parameter; and performing a re-underwriting of the insurance policy using the parameters of the insurance policy and a set of re-underwriting criteria. The method may further include generating re-underwritten policy data to constitute a re-underwritten policy. The method may include providing an annuity.

This application is a continuation of U.S. patent application Ser. No.12/339,822 filed on Dec. 19, 2008 entitled “SYSTEMS AND METHODS FORPROVIDING A CASH VALUE ADJUSTMENT TO A LIFE INSURANCE POLICY” (AttorneyDocket No. 52493.000525), which claims priority to U.S. ProvisionalPatent Application 61/016,184 filed Dec. 21, 2007, the content of whichare incorporated herein by reference in their entirety.

BACKGROUND OF THE INVENTION

Life insurance is typically in the form of a contract between an insurerand a policy owner. By the terms of the contract, the insurer agrees topay a sum of money upon the death of the insured, i.e., the person whoselife is insured. In return, the policy owner pays the insurer a premium.The premium is paid in a lump sum and/or is paid periodically at someinterval. The policy owner and the insured may or may not be the sameperson.

Over the course of the term of a policy, the health of the insuredperson may well change. Some life insurance companies provide for such achange in health. For example, some life insurance companies offeracceleration of the death benefits for terminal illness and chronicillness and may permit the borrowing of amounts in excess of the cashvalue of the policy, on the basis of re-underwriting.

On the periphery of the life insurance industry, some companies alsoprovide what has been characterized as a “life settlement.” A lifesettlement is a mechanism by which a company (often a third party)offers a cash payment to a life insurance policy owner for an insuredwho has suffered a decline in health/life expectancy. The third partytypically pays more to the policy owner than the cash value of thepolicy, i.e., the dollar amount that the insurer is contractuallyobligated to pay to the policy owner who surrenders his or her policy.That is, in a life settlement arrangement, the purchaser typicallybecomes the new owner and beneficiary and is responsible for futurepremium payments. Life settlements have shortcomings, including expensesassociated with the life settlement transaction, inconsistency in thelife settlement process, unavailability of partial life settlements,questions about insurable interests of the new owners, state law timinglimitations and other shortcomings.

BRIEF SUMMARY OF THE INVENTION

The invention provides a method and system for performing a cash valueadjustment of a life insurance policy. In particular, the inventionprovides a computer processing system for performing a cash valueadjustment to a life insurance policy issued by an insurer and owned bya policy owner. The system may include a communication portion thatinputs parameters of a life insurance policy, the parameters includingcontrolling parameters. The controlling parameters might include (a) aconstraint dictated parameter of the life insurance policy; and (b) adriven parameter of the life insurance policy. The system may furtherinclude a relationship processing portion that analyses the relationshipbetween the constraint dictated parameter and the driven parameter.Further, the system may further include a re-underwriting analysisportion, the re-underwriting analysis portion performing are-underwriting of the life insurance policy using the parameters of thelife insurance policy and a set of re-underwriting criteria. The set ofre-underwriting criteria may include a constraint relationship, theconstraint relationship constituting a relationship, e.g. a legallymandated relationship, between certain of the parameters of the lifeinsurance policy.

The re-underwriting analysis portion generates re-underwritten policydata to constitute a re-underwritten policy, the re-underwritinganalysis portion using the re-underwritten policy data to adjust theconstraint dictated parameter. Further, the relationship processingportion determines a magnitude of change, resulting from there-underwriting, in the constraint dictated parameter. The systemfurther includes a hypothetical cash value adjustment portion, the cashvalue adjustment portion performing an adjustment of the drivenparameter based on the magnitude of change (before and after there-underwriting) in the constraint dictated parameter. The adjustment isperformed to maintain the relationship between the constraint dictatedparameter and the driven parameter under a formula agreed upon by thelife insurance policy insurer and the policy owner. In the invention,the communication portion outputs the re-underwritten policy data of thehypothetical re-underwritten policy along with the adjusted constraintdictated parameter and the adjusted driven parameter. The cash valueadjustment portion may also determine an available amount, forwithdrawal or borrowing, as well as the amount available to pay thepremium for an annuity product.

BRIEF DESCRIPTION OF THE DRAWINGS

The present invention can be more fully understood by reading thefollowing detailed description together with the accompanying drawings,in which like reference indicators are used to designate like elements,and in which:

FIG. 1 is a high level flow chart showing a cash value adjustmentmethodology in accordance with one embodiment of the invention;

FIG. 2 is a diagram showing features of the cash value adjustmentmethodology in accordance with one embodiment of the invention;

FIG. 3 is a block diagram operating system in accordance with oneembodiment of the invention;

FIG. 4 is a further flowchart showing a process to provide lifeinsurance policy with a “cash value adjustment” feature including anannuity in accordance with one embodiment of the invention;

FIG. 5 is a flowchart showing further details of the “cash valueadjustment processing” of FIG. 4 in accordance with one embodiment ofthe invention; and

FIG. 6 is a further flowchart showing a process to provide lifeinsurance policy with a “cash value adjustment” feature in accordancewith one embodiment of the invention.

DETAILED DESCRIPTION OF THE INVENTION

Hereinafter, aspects of various embodiments of the invention will bedescribed. As used herein, any term in the singular may be interpretedto be in the plural, and alternatively, any term in the plural may beinterpreted to be in the singular.

As used herein, the invention will be described as a “cash valueadjustment” feature provided with a life insurance policy. Further, asused herein, a life insurance policy, to which the invention applies, isa contract between an insurer and a policy owner in which the policyowner (or other entity) pays a premium (or premiums) to the insurer oran affiliate of the insurer, and in which the insurer or an affiliatepays monies upon due proof of the insured's death, wherein the lifeinsurance policy may be associated with a cash value.

As used herein, the term “hypothetical” and variations thereof, meansthat analysis is performed to provide assessment of attributes of theinsurance and allows offerings to be effected based on such assessments,in accord with the invention, but that the performance of such analysis,in and of itself, does not change the attributes of the life insurancepolicy. For example, the determination of the hypothetical change in thecost of the insurance, in the processing of the invention, providesassessment of the cost of the insurance and allows offerings to beeffected under the invention, but in and of itself does not change thereality of what the cost of the insurance is.

As described above, some life insurance companies offer acceleration ofthe death benefits for terminal illness and chronic illness and maypermit the borrowing of amounts in excess of the cash value on the basisof re-underwriting. However, it is not known in the art to offer acalculated enhancement of a cash surrender value, of a life insurancepolicy, through re-underwriting that is then used as the basis forproviding an enhanced cash value that may either be withdrawn (withoutproof of terminal or chronic illness) or borrowed, or that is then usedas the basis for providing a settlement annuity to replace the lifepolicy.

As described above, life settlements have shortcomings. Life settlementsoffer cash payments to life insurance policy owners who have suffered adecline in health/life expectancy. Life settlements do not provide anoption to the policy owner to retain coverage, while securing funds, orto exchange coverage for an annuity contract, i.e., life settlements donot provide desired options to the policy owner, i.e., the holder/ownerof the policy, such desired options being to retain coverage on theinsured's life, secure funds, and/or to receive the settlement proceedsin the form of installments paid by an insurance company under animmediate annuity contract. As used herein, an “immediate annuity” meansan annuity where payments start within a year or approximately a yearfrom issue, e.g. meaning that (a) if a monthly payment annuity, thenpayments start within the first 13 months of issuance, or (b) if aquarterly payment annuity, then payments start within the first year andquarter of issuance, for example. However, the invention is not limitedto utilization of an immediate annuity, i.e., various other types ofannuities may be utilized.

In accordance with one embodiment of the invention, the insurer, i.e.,the entity that provided the life insurance policy, may offer and/ormaintain an annuity of the invention, as described herein. However,alternatively some third party may offer and/or maintain such annuity.

As used herein, a “third party” means a party that is not commonly ownedvis-à-vis some other party, such as an insurer, i.e., such that afurther party X would be a third party vis-à-vis insurance company X ifthe further party X and the insurance company X were not commonly owned.

In accordance with one embodiment of the invention, the invention, i.e.,innovation, provides a life insurance policy owner with the right tobenefit from a pre-determined mathematical relationship between the cashvalue and the guaranteed cost of insurance rate (COI rate) by beingre-underwritten post-issue upon request or at times specified in thepolicy, for example. In particular, the process of the invention mayresult in an increase in guaranteed COI rates leading to thehypothetical crediting of additional cash value to the policy, forexample, upon a decline in the insured's health/life expectancy. Thepolicy may also provide for a reduction in guaranteed COI rates, withoutadjustment to cash value, if the insured's health is found to beimproved.

In one aspect, the innovation is intended to increase the liquidityprovided by the insurer of a life insurance policy, beyond thatavailable through cash surrenders or loans, and without resort tosecondary markets. In one aspect, the innovation is intended to be asubstitute for a “life settlement.” In contrast to a life settlement,the innovation has generally lower transaction costs and greaterflexibility in implementation.

The innovation may provide for the policy owner retaining life insurancecoverage after cash values have been hypothetically increased throughre-underwriting, but permits all or part of these values to be withdrawnat the direction of the policy owner. Thus, the policy owner who hassuffered a decline in health (decline in life expectancy) has theability to access the economic value of the policy without forfeitingrights to name the beneficiary of the policy's death benefit. Throughpartial surrenders or partial withdrawals, the policy owner may reducethe death benefit to the desired amount.

In addition, the innovation may provide for the policy owner obtainingan annuity payout based on cash values that have been hypotheticallyincreased through re-underwriting. The innovation is an enhancement thatcan be applied to a wide variety of “life insurance policies” that cangenerate cash values. The invention may typically be applied to newlyissued life insurance policies. However, the invention might also beapplied to previously issued life insurance policies. For example, thecash value adjustment feature of the invention might be added on to anexisting life insurance policy in some manner that is mutuallyacceptable to the insurer, the policy owner and that is legallyacceptable, i.e., taking into account any applicable legal requirements,such as regulations.

To explain further, the innovation is a method, and system forperforming the method, of doing life insurance business based onvoluntary re-underwriting of the insured, upon request of the policyowner or at a specified time. The re-underwriting may be done inconjunction with the application of an actuarial formula basedmethodology. As a result, the re-underwriting may result in ahypothetical increase of the cash value of the policy, which inaccordance with one embodiment of the invention is applied to animmediate annuity. In accordance with one embodiment of the invention,such an increase in the cash value of the policy would reflect apre-determined relationship between the guaranteed cost of insurancerates (COI rates), the related net single premium (NSP), the cash valueof the policy and/or other parameters associated with the life insurancepolicy. As used in this application, the term “NSP” means the net singlepremium (based on mortality, interest, and expense assumptions requiredby law, stated in the policy, or otherwise established by agreementbetween the insurer and policy owner) that is needed to fund futurebenefits under the life insurance policy, as such future benefits aredefined by law, stated in the policy or otherwise defined by agreementbetween the insurer and policy owner. The formula might be applied onlyif the re-underwriting disclosed a deterioration in the insured's healthsufficient to justify an increase in the COI rates. In accordance withone embodiment of the invention, any increased cash value, resulting inthe re-underwriting, would be available for withdrawal or borrowing orcould be left in the policy to support the new COI rate. In accordancewith a further embodiment of the invention, any increased cash value,resulting in the re-underwriting, might be provided as funds availableto the policy owner and/or might be provided to the policy owner as animmediate annuity. The immediate annuity may be the only optionavailable if re-underwriting discloses that the insured is currentlyuninsurable. In that case, the highest COI rate offered by the insurancecompany would be insufficient to reflect the risk of continuing to coverthe insured. Under one embodiment of the invention, The policyholderwould then have the option to retain the unadjusted policy or exchangethe policy for the an annuity, such as for example an immediate annuity.

It is understood that while the invention is described herein withreference to the technical term “net single premium (NSP)”, theinvention is certainly not limited to a life insurance policy having asingle premium. Rather, a life insurance policy with the cash valueadjustment feature, of the invention, may have multiple premiumsassociated with such policy. Indeed, the mechanics and number of thepremium(s), and how the premium(s) is paid, may vary widely in practiceof the invention.

FIG. 1 is a high level flow chart showing a cash value adjustmentmethodology in accordance with one embodiment of the invention. Asshown, the process of providing a life insurance policy with the cashvalue adjustment feature, of the invention, starts in step 10. Asreflected in step 10, an annuity purchase option may be provided, asdescribed below. After step 10, the process passes to step 20.

In step 20, the process identifies a relationship of parameters by whicha “life insurance” policy is defined. Through the term of the lifeinsurance policy (including any re-underwriting in accord with thepresent invention), this relationship effectively functions as aconstraint. Accordingly, this relationship is herein characterized as a“constraint relationship.” For example, the constraint relationshipmight define a required relationship between a cash surrender value ofthe life insurance policy vis-à-vis a single premium that would have tobe paid at that time to fund future benefits under the life insurancepolicy. However, the constraint relationship might be defined in termsof other parameters associated with the life insurance policy. In FIG.1, after step 20, the process passes to step 30.

In step 30, before a re-underwriting is performed, the processdetermines the relationship between what is herein characterized as“cash value adjustment controlling parameters” (i.e., “controllingparameters”). That is, as agreed upon (between the insurer, who may bethe issuer, and the policy owner) at the issuance of the life insurancepolicy, the relationship between the controlling parameters that shallbe maintained. In accordance with one embodiment of the invention, thisrelationship between the controlling parameters is defined by a formula,which is also agreed upon at issuance of the life insurance policy. Itis appreciated that the particular parameters used as the controllingparameters, the particular relationship to be maintained between thosecontrolling parameters and the particular formula to define suchrelationship, might well be varied. Such variance might depend on theparticulars of the life insurance policy desired, the risk tolerances ofthe insurer and policy owner, and other criteria. For example, thecontrolling parameters might be (1) the cash surrender value (CSV) ofthe life insurance policy before the re-underwriting and (2) the netsingle premium (NSP) of the life insurance policy before there-underwriting. After step 30, the process passes to step 40.

In step 40, the insurer re-underwrites the life insurance policy. Thisre-underwriting is done upon the request of the policy owner, and/or ata specified intervals, and is done assuming that the policy ownerexercises the right to re-underwrite. If the policy owner opts to notexercise the right to re-underwrite, the life insurance policy wouldcontinue under the current terms, in accordance with one embodiment ofthe invention.

After step 40, the process passes to step 45. In step 45, the processdetermines the hypothetical change in the cost of the insurance (COIRates). That is, changes in the parameters associated with there-written life insurance policy, and in particular the mortality, willtypically result in a change of the cost of the insurance. After step45, the process passes to step 50.

In step 50, the process determines the change in one of the controllingparameters as a result of the re-underwriting. The change might be inthe form of a percentage change, for example. Further, the new value ofthe controlling parameter in which the change is measured (e.g. apercentage change) might be dictated by both the new mortality (presentupon the re-underwriting) and the constraint relationship. In accordancewith one embodiment of the invention, this controlling parameter mightbe the net single premium (NSP) associated with the policy. Thiscontrolling parameter is described below as the “constraint dictatedparameter.”

Thereafter, as shown in FIG. 1, the process passes to step 60. In step60, the process adjusts the second controlling parameter to adjust forthe change in the first controlling parameter. This adjustment isperformed so as to maintain the relationship between the firstcontrolling parameter and the second controlling parameter (under theformula agreed to at the time of issuance of the original life insurancepolicy or the time post-issue that the cash value adjustment feature wasadded to the policy by rider). For example, the second controllingparameter might be the cash surrender value (CSV), and is furtherdescribed below as the driven parameter. Accordingly, in one embodimentof the invention, in step 60, the process adjusts the second controllingparameter (e.g. CSV) to maintain the relationship between thecontrolling parameters (NSP and CSV) under the formula promised at issueof the life insurance. The formula might be dependent on a variety offactors, including the formula being related to the necessary futurepremiums before and after underwriting, as well as other parameters. Forexample, if the life expectancy has increased, then the CSV is notreduced.

Thereafter the process passes to step 70. As reflected in step 70, anyincreased cash value, resulting in the re-underwriting, would beavailable for withdrawal or borrowing in some manner or could be left inthe policy to support the new COI rate.

After step 70, the process passes to step 80. In step 80, the processends.

FIG. 1 also reflects an embodiment of the invention, as shown in step70′, in which the processing of step 70 is effected by utilizing anannuity. Specifically, in step 70′ (of FIG. 1), the value determined instep 60 is applied to the purchase of a single premium immediate annuitycontract, or some other annuity, in accordance with one embodiment ofthe invention. This contract might typically be period-certain only,although such might employ life contingencies, possibly including lifecontingencies reflecting underwriting for impaired risk. Further detailsof such utilization of an annuity are described below.

In accordance with one embodiment of the invention, the policy ownermay, at a suitable point in the process (of exercising the cash valueadjustment feature) be presented with an option to retain the policy inconjunction with withdrawing or borrowing the increased value (see FIG.1, step 70); retain the policy in conjunction with securing an annuitywith the increased value; replacing the policy with an annuity; orreplacing the policy with some other form of payment; for example.Further, in accordance with one illustrative embodiment of theinvention, using funds available to borrow or withdraw, i.e., an“available amount,” an annuity might be secured at some later time,i.e., later as in some period of time after the exercise of the cashvalue adjustment feature.

FIG. 2 is a diagram showing high level features of the cash valueadjustment methodology in accordance with one embodiment of theinvention. As shown, the method includes issuing a life insurance policywith a hypothetical cash value adjustment feature. This issued lifeinsurance policy includes various parameters, which define the terms ofthe policy. As characterized herein, some of these parameters are deemedto be controlling parameters. As shown (and described above), suchcontrolling parameters include a constraint dictated parameter and adriven parameter, as well as other parameters.

As depicted in FIG. 2 (and described above with reference to FIG. 1) ata specified time or upon the request of the policy owner, the lifeinsurance policy is submitted for re-underwriting (under the cash valueadjustment feature). The controlling parameters (and the relationshipthere between) are determined before and after the re-underwriting. Thevariance (before and after re-underwriting) of the constraint dictatedparameter is dictated by the constraint relationship. The constraintrelationship is the legally mandated relationship between the parametersof the life insurance policy that must be present, so as to indeed be alife insurance policy. The constraint dictated parameter might be theNSP (net single premium) parameter of the policy.

On the other hand, the variance (before and after re-underwriting) ofthe driven parameter is dictated by both the change in the constraintdictated parameter, and the formula agreed upon at issuance or additionof the cash value adjustment feature to the policy. That is, such agreedupon formula goes to the contractually mandated relationship between theconstraint dictated parameter and the driven parameter. However, suchformula agreed to at issue of the life insurance policy, may indeed bebased upon or tied into various parameters that may (or may not) changepost issue, such as revised or new mortality tables, advances in diseasetreatment, and other parameters.

As reflected in FIG. 2, in accordance with one embodiment of theinvention, an annuity contract may be purchased based upon there-underwritten policy. The annuity might be purchased to replace thelife insurance policy. Alternatively, the life insurance policy might beretained, in addition to purchasing an annuity (i.e., an annuity oflesser value than if the life insurance policy had been replaced). Thatis, an annuity might be secured using an increased value resulting fromthe re-underwriting. Alternatively, an available amount might beprovided for borrowing or withdraw, in lieu of an annuity.

In accordance with some embodiments of the invention, the variousprocessing of the invention, as described herein, need not be performedby a single entity. Indeed, portions of such various processing may beperformed by different respective insurance companies and/or anotherthird party entity. As described herein, in one embodiment, the cashvalue adjustment feature could be provided as a contractual arrangementafforded after the issuance of a life insurance policy. Relatedly, inaccordance with one embodiment of the invention, the provision of thecash value adjustment feature might be provided by an entity other thanthe entity that originally issued the life insurance policy, i.e., otherthan the original insurer. For example, such another entity might buy anexisting life insurance policy from an issuer/insurer, upon an agreementwith the policy owner that the cash value adjustment feature would beprovided in a replacement policy, and perhaps, that the cash valueadjustment feature would be immediately exercised (so as to allow thepolicy owner to both retain their life insurance policy and secureliquidity, as described above). In that event the replacing insurer mayretain the insured's original policy or obtain its settlement value fromthe original issuer (through reinsurance) or through some form of thirdparty sale.

Further, a third party might propose the cash value adjustment featureto an insurer and policy owner, in conjunction with the understandingthat the insurer would continue to insure the policy and that the policyowner would continue to own the policy. That is, such third party mightact in the role of a broker of sorts to broker the deal, i.e., the dealof the cash value adjustment feature, between the insurer and theinsured, i.e., the policy owner. Such third party might securecompensation for such brokering and for performing underwriting or otherservices.

In general it is appreciated that the different processing and/orportions of the invention, as described herein, may be performed bydifferent entities. Such entities might coordinate in any of a varietyof manners, along with the policy owner, such as under some agreement.

FIG. 3 is a block diagram showing a processing system to perform thecash value adjustment methodology, in accordance with one embodiment ofthe invention. Specifically, FIG. 3 illustrates a cash value adjustmentcomputer processing system 100. The cash value adjustment computerprocessing system 100 performs the various processing done inconjunction with practice of the invention. In particular, the system100 includes specialized processing portions as described below. Thecash value adjustment computer processing system 100 generally performsprocessing not otherwise performed by the specialized processingportions.

The specialized processing portions in the system 100 include acommunication portion 110, a relationship processing portion 120, are-underwriting analysis portion 130, and a cash value adjustmentportion 140. The computer processing system 100 performs a cash valueadjustment to a life insurance policy issued by an insurer and owned bya policy owner, in accordance with one embodiment of the invention.

In operation, the communication portion 110 inputs parameters of a lifeinsurance policy. The life insurance policy, of course, contains avariety of parameters that define the policy. In particular, theseparameters of the policy include “controlling parameters.” Suchparameters are deemed controlling parameters in that they are, inparticular, looked to in performing the cash value adjustment, in accordwith the invention. In turn, and as described otherwise herein, thesecontrolling parameters include (1) a constraint dictated parameter ofthe life insurance policy; and (2) a driven parameter of the lifeinsurance policy.

The cash value adjustment computer processing system 100 includes therelationship processing portion 120. The relationship processing portion120 analyses the relationship between the constraint dictated parameterand the driven parameter. Such analysis is performed by the relationshipprocessing portion 120 both before and after a re-underwriting.

The re-underwriting analysis portion 130, in the system 100, performs are-underwriting of the life insurance policy using the parameters of thelife insurance policy and a suitable set of re-underwriting criteria. Inparticular, the set of re-underwriting criteria include the “constraintrelationship” as described above. The constraint relationshipconstitutes a legally mandated relationship between certain of theparameters of the life insurance policy. The re-underwriting analysisportion generates re-underwritten policy data to constitute are-underwritten policy.

As noted above, after the re-underwriting analysis portion 130 performsthe re-underwriting, the relationship processing portion determines amagnitude of change, resulting from the re-underwriting, in theconstraint dictated parameter. The constraint dictated parameter mightbe a net single premium (NSP) value associated with the policy.

The cash value adjustment portion 140 then performs an adjustment of thedriven parameter based on the magnitude of change, before and after there-underwriting, in the constraint dictated parameter (for example thepercentage change in the NSP). This adjustment is performed so as tomaintain the relationship between the constraint dictated parameter andthe driven parameter under a formula agreed upon by the life insurancepolicy insurer and the policy owner. Further, in accordance with oneembodiment of the invention, the cash value adjustment portionascertains the amount, if any, that is available, e.g. such as forwithdrawal or borrowing (i.e., the “available amount”).

Further, the communication portion 110 outputs the re-underwrittenpolicy data of the re-underwritten policy, along with the adjustedconstraint dictated parameter and the adjusted driven parameter. Inaccordance with one embodiment of the invention, the communicationportion 110 may also output the “available amount”.

In accordance with one embodiment of the invention, the cash valueadjustment computer processing system 100 includes an annuitizationportion 150. The annuitization portion 150 processes the “availableamount” to provide an annuity, i.e., an annuity contract, that isavailable to the policy owner. Such annuity may be the entirety of theavailable amount or a part of the available amount. For example, theavailable amount may be provided to fund a premium for an immediateannuity contract, or in some other way to set up funding for an annuity.

FIG. 4 is a flowchart showing a process of issuance and re-underwritingof a life insurance policy with a cash value adjustment feature, inaccordance with one embodiment of the invention. The processing of FIG.4 might be performed, at least in part, by the cash value adjustmentcomputer processing system 100 of FIG. 3, which may be in the form of acomputer processing system that is specialized for insurance relatedprocessing. Alternatively, the process of FIG. 4 might be performed byanother suitable processing system.

As shown in FIG. 4, the process starts in step 200 and passes to step210. In step 210, the process inputs the particulars of a customerrequesting life insurance coverage. These particulars might include age,health particulars, the amount of coverage desired, and relatedinformation. Then, the process passes to step 220.

In step 220, the process retrieves various data to process theapplication. Such data that is retrieved might include models,underwriting criteria, and other related data. After step 220, theprocess passes to step 230.

In step 230, the process determines parameters of the requested lifeinsurance policy, including performing underwriting analysis todetermine a premium parameter for policy. In conjunction with performingstep 230, the process imposes “mandated constraints” such that thecoverage indeed qualifies as “life insurance.” Then, the process passesto step 240.

In step 240, the process issues the life insurance policy with a “cashvalue adjustment” (CVA) feature. The policy sets forth times, i.e.,“adjustment open periods” at which the policy can be adjusted. Suchtiming may be based on a variety of factors. For example, the timing (atwhich an adjustment may be made) might be based on a time period fromthe issuance of the life insurance policy, the occurrence of aparticular event, a particular time of year, the age of the policyowner, the age of the insured, or any other suitable time frame.

Further, the life insurance policy issued in step 240 sets forth anagreed upon relationship between the cash value adjustment “controllingparameters” of the policy. Such controlling parameters include aconstraint dictated parameter and a driven parameter, e.g. the netsingle premium (NSP) and the cash surrender value (CSV), respectively,that is associated with the policy. This relationship between thecontrolling parameters may be defined in terms of a suitable formula.The formula may be based on a variety of parameters, as desired and asoffered up by the insurer and agreed upon by the policy owner.

After step 240, the process passes to step 250. In step 250, a period oftime passes. During this passing of time, the policy owner pays therequisite premiums. Then, the process passes to step 260.

Step 260 reflects that the cash value adjustment open period hasarrived. Accordingly, under the terms of the cash value adjustmentfeature of the policy, the policy owner now has the opportunity toeffect an annuity, in the embodiment of FIG. 4, based upon ahypothetical cash value adjustment.

Accordingly, in step 270, a decision is effected in which the policyowner decides whether to exercise the right to effect the annuitysettlement option. If in step 270, the policy owner decides not toexercise the option, then the process returns to step 250 (and furthertime passes until a cash value adjustment open period is present again).On the other hand, if the policy owner decides to exercise the enhancedannuity settlement option in step 270, then the process passes to step280.

It is appreciated that various further steps may be associated with anacceptance of the cash value adjustment feature. That is, in the casethat a policy owner decides to exercise the cash value adjustment, inaccordance with one embodiment of the invention, the insurer willdetermine the impact of the re-underwriting (including the financialramifications to the policy owner). The policy owner might then bepresented with the re-underwritten values. Thereafter, the policy ownerwould opt to accept or not accept such re-underwriting.

Returning to FIG. 4 (in the case that the policy owner has accepted), instep 280, processing is performed to effect the cash value adjustmentprocessing. Further details of such processing are set forth below withreference to FIG. 5.

As shown in FIG. 5, the process starts in step 280, and passes to step282. In step 282 of FIG. 5, the process initiates the cash valueadjustment of the life insurance policy. In particular, in step 282 (ofFIG. 5), the process determines values of and/or a relationship betweenthe cash value adjustment controlling parameters. After this valuationis performed, the process passes to step 284.

In step 284, the process performs re-underwriting of the life insurancepolicy. That is, such re-underwriting is performed based on varied terms(varied vis-à-vis the original terms) and in particular a variedmortality. This re-underwriting is performed resulting in a change invalue of the constraint dictated parameter (e.g. NSP), and whilemaintaining the applicable “mandated constraints.” Of note, the value ofthe “constraint dictated parameter” may be controlled by the “mandatedconstraints” in conjunction with factoring in a variety of otherparameters. After step 284, the process passes to step 285.

In step 285, the process determines the change in the cost (COI rates)of the re-underwritten life insurance policy. This change in rates mayresult from the change in the mortality parameter associated with there-underwritten policy. After step 285, the process passes to step 286.

In step 286, the process determines the magnitude of change in the“constraint dictated parameter”, i.e., such change resulting from there-underwritten policy. This magnitude might be a percentage change inthe net single premium (NSP) for example, in accordance with oneembodiment of the invention. Then, the process passes to step 287.

In step 287, the process imposes the agreed upon required relationshipbetween the controlling parameters. That is, the “constraint dictatedparameter” is controlled by the re-underwriting. Given such constraintdictated parameter, in step 287, the process determines the “drivenparameter” based on the “constraint dictated parameter.” In other words,in step 287, the process adjusts the driven parameter to maintain therelationship between the driven parameter and the constraint dictatedparameter (per the formula agreed upon and promised at issuance of thelife insurance policy).

Such relationship between the driven parameter and the constraintdictated parameter may be determined in any of a variety of manners. Ofcourse, however the relationship is to be defined, such relationshipshould be agreed upon by the parties. For example, the relationship(between the constraint dictated parameter and the driven parameter)might utilize: the magnitude of change in the constraint dictatedparameter (upon re-underwriting); the values of the controllingparameters right before re-underwriting; the relative values of thecontrolling parameters; the change in values of the controllingparameter from the original issuance of the policy; or at some othersuitable criteria.

After step 287 of FIG. 5, the process passes to step 289. In step 289,the process returns to step 290 of FIG. 4.

Accordingly, returning to the processing of FIG. 4 and step 290, in step290, the annuity is issued based upon the re-underwritten policy and thepolicy owner is provided the annuity contract in the manner required bylaw. After step 290 of FIG. 4, the process passes to step 292 of FIG. 4.

In step 292 of FIG. 4, the policy reserves, which are associated withthe life insurance policy, are adjusted to zero. After step 292, theprocess passes to step 294. In step 294 of FIG. 4, the process ends.Accordingly, an annuity has been exchanged for the life insurancepolicy.

FIG. 6 is a flowchart, in accordance with one embodiment of theinvention, showing (not specifically that an annuity is effected), butrather generally that the cash value adjustment feature was exercisedwith the potential in resulting in an available amount.

The processing of FIG. 6 is performed as described above with respect toFIG. 4, to the point that the process passes to step 270′.

As shown in the processing of FIG. 6, in step 270′, a decision iseffected in which the policy owner decides whether to exercise the rightto effect the cash value adjustment. If in step 270, the policy ownerdecides not to exercise the option, then the process returns to step 250(and further time passes until a cash value adjustment open period ispresent again). On the other hand, if the policy owner decides toexercise the cash value adjustment option in step 270′, then the processpasses to step 280′. Thus, as distinct from FIG. 4, in step 270′ of FIG.5, the policy owner does not decide whether to effect an annuity, butrather decides generally to exercise the cash value adjustment feature(which may entail an annuity in accordance with one embodiment of theinvention).

Upon the process passing to step 280′ of FIG. 6, processing is performedto effect the cash value adjustment processing. Further details of suchprocessing are described above with reference to FIG. 5. After step 280of FIG. 6, the process passes to step 290′.

In step 290′, the re-underwritten policy is adjusted and the policyowner is provided the revised parameters, i.e., the updated policyreflecting the changes, in the manner required by law. After step 290′,the process passes to step 292′.

In step 292′, the terms of the life insurance policy may allow forfurther cash value adjustments at later times. If such is allowed, theprocess returns to step 250 of FIG. 4. Alternatively, the terms of thelife insurance policy may not allow for further cash value adjustmentsat later times. As a result, the process passes to step 294′.

In step 294′, the process of FIG. 6 ends.

As described above, the cash value adjustment feature is provided with alife insurance policy at the time of issuance of the policy. However,such is not needed in the practice of the invention. That is, the cashvalue adjustment feature could be provided as a contractual arrangementafforded after the issuance of a life insurance policy. Such contractualarrangement might be afforded by the insurer or a third party, i.e.,other than the insurer.

With the systems and methods of embodiments as described above, it isappreciated that the driven parameter may well typically be in the formof a cash surrender value (CSV) or the like. However, alternatively, thedriven parameter might take on a different or slightly different form,such as some value that is associated with or related to the cashsurrender value (CSV).

In a similar vein, in systems and methods of embodiments as describedherein, it is appreciated that the constraint dictated parameter maywell typically be in the form of a net single premium (NSP), cashsurrender value (CSV) or the like. However, alternatively, theconstraint dictated parameter might take on a different or slightlydifferent form, such as some value that is associated with or related tothe net single premium (NSP).

Hereinafter, further aspects of implementation of the invention will bedescribed. As described above, FIG. 3 shows an embodiment of a system ofthe invention. Further, FIGS. 1, 2 and 4-6 show various processing ofembodiments of the invention.

The system, i.e., the computer processing system, of the invention orportions of the system of the invention may be in the form of a“processing machine,” such as a general purpose computer, for example.As used herein, the term “processing machine” is to be understood toinclude at least one processor that uses at least one memory. The atleast one memory stores a set of instructions. The instructions may beeither permanently or temporarily stored in the memory or memories ofthe processing machine. The processor executes the instructions that arestored in the memory or memories in order to process data. The set ofinstructions may include various instructions that perform a particulartask or tasks, such as those tasks described above in the flowcharts.Such a set of instructions for performing a particular task may becharacterized as a program, software program, or simply software.

In particular, the processing machine as described herein may be in theform of a computer processing system, including one that is specializedfor insurance related processing and/or specialized for underwritingrelated processing. Thus, such computer processing system that isspecialized for insurance/underwriting related processing may bespecifically provided to handle the various processing as describedherein, i.e., specific computer code and memory stores, for example, maybe provided to handle the processing as described herein

As noted above, the processing machine executes the instructions thatare stored in the memory or memories to process data. This processing ofdata may be in response to commands by a user or users of the processingmachine, in response to previous processing, in response to a request byanother processing machine and/or any other input, for example.

As noted above, the processing machine used to implement the inventionmay be a general purpose computer. However, the processing machinedescribed above may also utilize any of a wide variety of othertechnologies including a special purpose computer, a computer systemincluding a microcomputer, mini-computer or mainframe for example, aprogrammed microprocessor, a micro-controller, a peripheral integratedcircuit element, a CSIC (Customer Specific Integrated Circuit) or ASIC(Application Specific Integrated Circuit) or other integrated circuit, alogic circuit, a digital signal processor, a programmable logic devicesuch as a FPGA, PLD, PLA or PAL, or any other device or arrangement ofdevices that is capable of implementing the steps of the process of theinvention.

It is appreciated that in order to practice the method of the inventionas described above, it is not necessary that the processors and/or thememories of the processing machine be physically located in the samegeographical place. That is, each of the processors and the memoriesused in the invention may be located in geographically distinctlocations and connected so as to communicate in any suitable manner.Additionally, it is appreciated that each of the processor and/or thememory may be composed of different physical pieces of equipment.Accordingly, it is not necessary that the processor be one single pieceof equipment in one location and that the memory be another single pieceof equipment in another location. That is, it is contemplated that theprocessor may be two pieces of equipment in two different physicallocations. The two distinct pieces of equipment may be connected in anysuitable manner. Additionally, the memory may include two or moreportions of memory in two or more physical locations.

To explain further, processing as described above is performed byvarious components and various memories. However, it is appreciated thatthe processing performed by two distinct components as described abovemay, in accordance with a further embodiment of the invention, beperformed by a single component. Further, the processing performed byone distinct component as described above may be performed by twodistinct components. In a similar manner, the memory storage performedby two distinct memory portions as described above may, in accordancewith a further embodiment of the invention, be performed by a singlememory portion. Further, the memory storage performed by one distinctmemory portion as described above may be performed by two memoryportions.

Further, various technologies may be used to provide communicationbetween the various processors and/or memories, as well as to allow theprocessors and/or the memories of the invention to communicate with anyother entity; i.e., so as to obtain further instructions or to accessand use remote memory stores, for example. Such technologies used toprovide such communication might include a network, the Internet,Intranet, Extranet, LAN, an Ethernet, or any client server system thatprovides communication, for example. Such communications technologiesmay use any suitable protocol such as TCP/IP, UDP, or OSI, for example.

As described above, a set of instructions is used in the processing ofthe invention. The set of instructions may be in the form of a programor software. The software may be in the form of system software orapplication software, for example. The software might also be in theform of a collection of separate programs, a program module within alarger program, or a portion of a program module, for example. Thesoftware used might also include modular programming in the form ofobject oriented programming. The software tells the processing machinewhat to do with the data being processed.

Further, it is appreciated that the instructions or set of instructionsused in the implementation and operation of the invention may be in asuitable form such that the processing machine may read theinstructions. For example, the instructions that form a program may bein the form of a suitable programming language, which is converted tomachine language or object code to allow the processor or processors toread the instructions. That is, written lines of programming code orsource code, in a particular programming language, are converted tomachine language using a compiler, assembler or interpreter. The machinelanguage is binary coded machine instructions that are specific to aparticular type of processing machine, i.e., to a particular type ofcomputer, for example. The computer understands the machine language.

Any suitable programming language may be used in accordance with thevarious embodiments of the invention. Illustratively, the programminglanguage used may include assembly language. Ada, APL, Basic, C, C++,COBOL, dBASE, Forth, FORTRAN, Java, Modula-2, PASCAL, PROLOG, REXX,VISUAL BASIC, and/or JAVASCRIPT, for example. Further, it is notnecessary that a single type of instructions or single programminglanguage be utilized in conjunction with the operation of the system andmethod of the invention. Rather, any number of different programminglanguages may be utilized as is necessary or desirable.

Also, the instructions and/or data used in the practice of the inventionmay utilize any compression or encryption technique or algorithm, as maybe desired. An encryption module might be used to encrypt data. Further,files or other data may be decrypted using a suitable decryption module,for example.

As described above, the invention may illustratively be embodied in theform of a processing machine, including a computer or computer system,for example, that includes at least one memory. It is to be appreciatedthat the set of instructions, i.e., the software for example, thatenables the computer operating system to perform the operationsdescribed above may be contained on any of a wide variety of media ormedium, as desired. Further, the data that is processed by the set ofinstructions might also be contained on any of a wide variety of mediaor medium. That is, the particular medium, i.e., the memory in theprocessing machine, utilized to hold the set of instructions and/or thedata used in the invention may take on any of a variety of physicalforms or transmissions, for example. Illustratively, the medium may bein the form of paper, paper transparencies, a compact disk, a DVD, anintegrated circuit, a hard disk, a floppy disk, an optical disk, amagnetic tape, a RAM, a ROM, a PROM, a EPROM, a wire, a cable, a fiber,communications channel, a satellite transmissions or other remotetransmission, as well as any other medium or source of data that may beread by the processors of the invention.

Further, the memory or memories used in the processing machine thatimplements the invention may be in any of a wide variety of forms toallow the memory to hold instructions, data, or other information, as isdesired. Thus, the memory might be in the form of a database to holddata. The database might use any desired arrangement of files such as aflat file arrangement or a relational database arrangement, for example.

In the system and method of the invention, a variety of “userinterfaces” may be utilized to allow a user to interface with theprocessing machine or machines that are used to implement the invention.As used herein, a user interface includes any hardware, software, orcombination of hardware and software used by the processing machine thatallows a user to interact with the processing machine. A user interfacemay be in the form of a dialogue screen for example. A user interfacemay also include any of a mouse, touch screen, keyboard, voice reader,voice recognizer, dialogue screen, menu box, list, checkbox, toggleswitch, a pushbutton or any other device that allows a user to receiveinformation regarding the operation of the processing machine as itprocesses a set of instructions and/or provide the processing machinewith information. Accordingly, the user interface is any device thatprovides communication between a user and a processing machine. Theinformation provided by the user to the processing machine through theuser interface may be in the form of a command, a selection of data, orsome other input, for example.

As discussed above, a user interface is utilized by the processingmachine that performs a set of instructions such that the processingmachine processes data for a user. The user interface is typically usedby the processing machine for interacting with a user either to conveyinformation or receive information from the user. However, it should beappreciated that in accordance with some embodiments of the system andmethod of the invention, it is not necessary that a human user actuallyinteract with a user interface used by the processing machine of theinvention. Rather, it is contemplated that the user interface of theinvention might interact, i.e., convey and receive information, withanother processing machine, rather than a human user. Accordingly, theother processing machine might be characterized as a user. Further, itis contemplated that a user interface utilized in the system and methodof the invention may interact partially with another processing machineor processing machines, while also interacting partially with a humanuser.

It will be readily understood by those persons skilled in the art thatthe present invention is susceptible to broad utility and application.Many embodiments and adaptations of the present invention other thanthose herein described, as well as many variations, modifications andequivalent arrangements, will be apparent from or reasonably suggestedby the present invention and foregoing description thereof, withoutdeparting from the substance or scope of the invention.

Accordingly, while the present invention has been described here indetail in relation to its exemplary embodiments, it is to be understoodthat this disclosure is only illustrative and exemplary of the presentinvention and is made to provide an enabling disclosure of theinvention. Accordingly, the foregoing disclosure is not intended to beconstrued or to limit the present invention or otherwise to exclude anyother such embodiments, adaptations, variations, modifications andequivalent arrangements.

1-29. (canceled)
 30. A computer processing system that performs a cashvalue adjustment to an insurance policy issued by an insurer and ownedby a policy owner, the computer processing system comprising: a computerprocessor executing: a communication portion; a relationship processingportion; a re-underwriting analysis portion; and a cash value adjustmentportion; the communication portion inputs parameters of an insurancepolicy, the parameters including controlling parameters, and thecontrolling parameters including: a constraint dictated parameter of theinsurance policy; and a driven parameter of the insurance policy; therelationship processing portion analyzes a relationship between theconstraint dictated parameter and the driven parameter; there-underwriting analysis portion performs a re-underwriting of theinsurance policy using the parameters of the insurance policy and a setof re-underwriting criteria, the set of re-underwriting criteriaincluding a constraint relationship, the constraint relationshipconstituting a relationship between certain of the parameters of theinsurance policy, the re-underwriting analysis portion generatingre-underwritten policy data to constitute a re-underwritten policy; therelationship processing portion determining a magnitude of change,resulting from the re-underwriting, in the constraint dictatedparameter; the cash value adjustment portion performs an adjustment ofthe driven parameter based on the magnitude of change, before and afterthe re-underwriting, in the constraint dictated parameter, theadjustment being performed to maintain the relationship between theconstraint dictated parameter and the driven parameter under a formulaagreed upon by the insurance policy insurer and the policy owner; andthe communication portion outputting the re-underwritten policy data ofthe re-underwritten policy along with the adjusted constraint dictatedparameter and the adjusted driven parameter; and wherein the computerprocessing system is in a form of a computer processing system thatprocesses insurance related information.
 31. The system of claim 30,wherein the cash value adjustment portion uses a net single premium(NSP) as the constraint dictated parameter.
 32. The system of claim 30,wherein the cash value adjustment portion uses a cash surrender value(CSV) as the driven parameter.
 33. The system of claim 32, wherein thecash value adjustment portion uses a net single premium (NSP) as theconstraint dictated parameter.
 34. The system of claim 30, wherein therelationship processing portion determining a magnitude of change,resulting from the re-underwriting, in the constraint dictated parameterincludes: determining a percentage change in the value of the constraintdictated parameter before the re-underwriting vis-à-vis a value of theconstraint dictated parameter after the re-underwriting.
 35. The systemof claim 30, wherein the re-underwriting analysis portion furtherdetermines a change in cost of insurance (COI rates) that are associatedwith the re-underwritten insurance policy.
 36. The system of claim 30,wherein the cash value adjustment portion determines an available amountbased on the driven parameter, and the communication portion outputs theavailable amount.
 37. The system of claim 36, further including anannuitization portion, the annuitization portion determining, based onthe amount available, an annuity product for the policy owner.
 38. Thesystem of claim 37, wherein the available amount is output by thecommunication portion in a form of the annuity product.
 39. The systemof claim 30, wherein the relationship is a legally mandatedrelationship.
 40. The system of claim 30, wherein the relationship is arelationship agreed upon by the insurer and the policy owner.
 41. Amethod to perform a cash value adjustment to an insurance policy issuedby an insurer and owned by a policy owner, the method performed by acomputer processing system, the method comprising: inputting parametersof an insurance policy, by the computer processing system, theparameters including controlling parameters, and the controllingparameters including: a constraint dictated parameter of the insurancepolicy; and a driven parameter of the insurance policy; the computerprocessing system analyzing a relationship between the constraintdictated parameter and the driven parameter; the computer processingsystem performing re-underwriting of the insurance policy using theparameters of the insurance policy and a set of re-underwritingcriteria, the set of re-underwriting criteria including a constraintrelationship, the constraint relationship constituting a relationshipbetween certain of the parameters of the insurance policy; the computerprocessing system generating re-underwritten policy data to constitute are-underwritten policy, in conjunction with using the re-underwrittenpolicy data to adjust the constraint dictated parameter; the computerprocessing system: determining a change in the constraint dictatedparameter associated with the re-underwritten policy; determining amagnitude of change in the constraint dictated parameter; performing anadjustment of the driven parameter based on the magnitude of change,before and after the re-underwriting, in the constraint dictatedparameter, the adjustment being performed to maintain the relationshipbetween the constraint dictated parameter and the driven parameter undera formula agreed upon by the insurance policy insurer and the policyowner; and determining an available amount, based on at least one of thecontrolling parameters; and outputting, by a communication portion, theavailable amount; and wherein the computer processing system is in aform of a computer processing system that processes insurance relatedinformation.
 42. The method of claim 41, further including thecommunication portion also outputting the re-underwritten policy data ofthe re-underwritten policy along with the constraint dictated parameteras adjusted and the adjusted driven parameter.
 43. The method of claim41, wherein the computer processing system is maintained by the insurerof the insurance policy.
 44. The method of claim 41, wherein thecomputer processing system is maintained by a third party that is notthe insurer of the insurance policy.
 45. The method of claim 41, whereinthe computer processing system is maintained by a third party that isnot the insurer of the insurance policy, the computer processing systemcommunicating with an insurer computer processing system, which ismaintained by the insurer of the insurance policy, so as to apply themethod to the insurance policy.
 46. The method of claim 41, wherein theformula is agreed upon by the insurance policy insurer and the policyowner after the issuance of the policy.
 47. The method of claim 41,further including the computer processing system determining, based onthe amount available, a premium for an annuity product for the policyowner.
 48. A computer processing system to perform a cash valueadjustment to an insurance policy issued by an insurer and owned by apolicy owner to effect a settlement option in a form of an annuitycontract, the computer processing system comprising: a computerprocessor executing: a communication portion; a relationship processingportion; a re-underwriting analysis portion; a cash value adjustmentportion; a cash value adjustment; and an annuitization portion; thecommunication portion inputs parameters of an insurance policy, theparameters including controlling parameters, and the controllingparameters including: a constraint dictated parameter of the insurancepolicy; and a driven parameter of the insurance policy; the relationshipprocessing portion analyzes a relationship between the constraintdictated parameter and the driven parameter; the re-underwritinganalysis portion performs a re-underwriting of the insurance policyusing the parameters of the insurance policy and a set ofre-underwriting criteria, the set of re-underwriting criteria includinga constraint relationship, the constraint relationship constituting arelationship between certain of the parameters of the insurance policy,the re-underwriting analysis portion generating re-underwritten policydata to constitute a re-underwritten policy, the re-underwritinganalysis portion using the re-underwritten policy data to adjust theconstraint dictated parameter so as to generate an adjusted constraintdictated parameter; the relationship processing portion determining amagnitude of change, resulting from the re-underwriting, in theconstraint dictated parameter; the cash value adjustment portionperforms an adjustment of the driven parameter based on the magnitude ofchange, before and after there-underwriting, in the constraint dictatedparameter, the adjustment being performed to maintain a mathematicalrelationship between the constraint dictated parameter and the drivenparameter under a formula agreed upon by the insurance policy insurerand the policy owner, and the communication portion outputtingthere-underwritten policy data of the re-underwritten policy along withthe adjusted constraint dictated parameter and the adjusted drivenparameter; and the annuitization portion determines an adjusted cashvalue, based on such output, to determine a premium of an annuitycontract.
 49. The computer processing system of claim 48, wherein theannuity contract is a single premium immediate annuity contract.